The International Energy Association released a new prediction that say before the end of the year 2017, the U.S. would become the world’s largest producer of oil passing both Russia and Saudi Arabia in the process. The prediction gives the clearest sign yet of the how the shale revolution has redrawn the global energy landscape.
The IEA is the developed world’s most respected forecaster of energy and it is just the first time it has made such a prediction. The IEA’s decision underscores how the recent boom in drilling, which unlocked North American reserves of gas and oil that were hard to reach, is starting to change the world’s balance of oil. However, other experts believe that the U.S. oil boom is too new and still in its infancy and therefore its levels of growth predicted by the IEA are hard to determine.
If the IEA prediction is in fact realized then it would create great implications in commodity markets throughout the world and the geopolitics on energy. Some energy experts are starting to wonder if the U.S. were to become energy independent, would it continue safeguarding the critical supply routes as well as sea lanes around the world like it has done for more than two decades.
The most recent increase in the U.S. of domestic production of bio-fuels such as ethanol as well as tight oil along with new legislation for fuel efficiency that is set to come on line will lower the oil supply demand for the U.S. This will lead to a large fall off for U.S. oil imports, which is estimated to fall from a high of 10 million barrels a day to just 4 million over the next ten years.